Bank of America simply did the right thing

Washington  It’s an all-too-familiar Washington story. Officials call a news conference to pat themselves on the back for righting a wrong they shouldn’t have let occur in the first place.

Meanwhile, the hapless victims are left to ponder what might have been had those officials been more vigilant.

It happened again this week when the Federal Trade Commission announced it had secured from Bank of America a $108 million settlement to refund consumers who had mortgages serviced by Countrywide Home Loans Inc. and BAC Home Loans Servicing LP, which formerly did business as Countrywide Home Loans Servicing LP.

The FTC says Countrywide charged excessive fees for services such as property inspections, inflated the amount that borrowers owed when they filed for bankruptcy protection, and didn’t tell people when new fees or charges were being added to their loans. Some homeowners, for example, were charged as much as $2,500 for trustee fees, even though the going rate for such a service was in the range of $600.

“Just mowing a lawn could result in a $300 bill to a homeowner,” FTC Chairman Jon Leibowitz said.

‘Absolutely sterling’?

The settlement is one of the largest ever for the FTC, which overseas non-banking functions such as loan servicing. But a little humility would have been nice.

FTC Commissioner J. Thomas Rosch actually called Bank of America, which purchased Countrywide in July 2008, a hero. Rosch gushed that Bank of America stepped up and negotiated a settlement that was “absolutely sterling.”

I don’t see it. To me, a hero is someone who makes extra effort, does something special. Bank of America simply did what it was supposed to do after acquiring a company that allegedly fleeced borrowers trying to hold onto their homes. You don’t get extra credit from me for doing the right thing when you own a company that did something wrong.

When one of my children misbehaves and I have to apologize for his or her actions, accolades are not in order for stepping up and taking responsibility.

Bank America knew of Countrywide’s ugly past. So it’s not a hero for paying Countrywide customers what they were overcharged.

Bank of America said it settled to avoid the expense of litigating the case. “The settlement allows us to put all of these matters behind us,” the company said in a statement, adding that the settlement was “no admission of any wrongdoing.”

Everyone and every agency that didn’t do enough to stem the housing crisis that crushed borrowers, investors and good-standing homeowners should be hanging their heads.

The real victims

Yes, the FTC is making somebody pay now. But this does little to help people such as Robin Atchley and her husband, John. The couple from Waleska, Ga., alleges that Countrywide gouged them with fees and charges and threatened foreclosure if they didn’t pay up. They tried filing for Chapter 13 bankruptcy protection but even that didn’t shield them from a steady stream of pumped-up fees. The couple finally gave up fighting and sold their home.

“Our house is gone,” Robin Atchley said during the same news conference in which the FTC announced the settlement. “There is nothing that anyone can do to change that.”

If measured by the financial abuse people experienced, the settlement doesn’t seem like such a victory, does it?

On the other hand, let’s hope this action by the FTC does make a difference going forward. Leibowitz said he hopes the financial reform legislation still stuck in Congress will expand the FTC’s rulemaking powers so it can make rules more easily and respond to practices that harm consumers.

Leibowitz said more than 200,000 people will be reimbursed for overcharges on loans that were serviced by Countrywide before Bank of America acquired it.

If you’re eligible for a refund as part of the $108 million settlement, you’ll get a letter in the mail, according to the FTC. Go to ftc.gov/ countrywide if you want to keep track of the case.

The settlement also requires that the Countrywide loan servicing operation make significant changes in handling bankruptcy cases.

For example, the servicer must send borrowers in Chapter 13 bankruptcy a monthly notice with information about what amounts are owed.

The servicer also has to come up with a program that ensures the accuracy of loan information filed in those Chapter 13 cases.

“I’m hopeful the settlement will help other families avoid the nightmare we went through and save their homes,” Atchley said.

When Atchley’s words come true, then that’ll be something to crow about.